View all notes
Coffee and cocaine had a lot in common for the Bay Area tech milieu: Both came from the Americas as part of the restructuring of Third World economies toward consumable exports; both were increasingly available at several price points; and both made people go fast for long periods of time. Following Miami, Los Angeles, and New York, Silicon Valley was the fourth corner of the American coke binge. Thanks in part to the industry’s cozy relationship with elements in the U.S. federal government, the international cocaine trade increased in volume during the period. In the 1980s, street and wholesale prices fell rapidly while purity increased.30 Blow became as central to the tech industry as it was to Hollywood or Wall Street, and Palo Alto gave the drug its own nerdy spin. “The valley’s would-be titans of industry preferred their cocaine at the office, or at house parties where husbands gathered together to talk incessantly about computers, while ignoring their wives,” writes scholar Charlton D. McIlwain. “Cocaine retained every bit of its glitz and glamour. But in the valley, it was all designed to push the work. Cocaine labored in service of the dream. For most, the dream was a fantasy, but they chased it nonetheless. Cocaine kept them in the race.”31 Michael Malone describes the era as a white-powder blizzard—the only kind the Bay ever saw—complete with coke mirrors made of clean silicon wafers purloined from work.32 The drugs certainly help explain both the wacky business models and the general surfeit of enthusiasm—as well as the country’s highest divorce rate.33
lol
[...] Protests targeted public-facing brands, holding them accountable for conditions in their supply chains, since the ability to sully brands was one of the movement’s few points of leverage over the private sector. The endgame for this strategy was a reform promise from the target, a sort of DIY regulation without the state. Going after individual violators was an anticapitalist strategy for the war-on-crime era, and brand-heavy offshored textile companies were especially vulnerable. Most famous was Nike: Activists successfully associated the trademarked Swoosh logo with children working in Third World sweatshops, yielding a wide-ranging series of promises from the cofounder and CEO, Phil Knight (Stanford MBA ’62).viii 39 These agreements were not an effective way of improving labor’s situation, and few involved were under the false impression that they were. These were bad days for working people. You could tell because the stock market was going up.
lol
To speak about crime in this context, even critically, is to accept a classed definition. Wage theft, stock fraud, and tax evasion are serious crimes, and they escalated dramatically in this period, but those are not the traditional referents for the 1990s “crime wave” discourse, because we have come to see ruling-class violations as part of a system that encourages cheating and corner cutting rather than as individual acts of social antagonism.40 The crime wave refers to crimes that interest the police and prosecutors, which is to say crimes committed by working-class and poor people, which also increased during the period. Any serious analysis of this kind of crime puts labor conditions at the forefront rather than some individualist idea of criminal intent; there was never much mystery to the phenomenon from a sociological point of view. But administrations from Reagan through George Bush Jr. (at least) understood that, to avoid risking another wage-price spiral, they had to deal with crime as a problem of too many criminals rather than too few good jobs.
Despite some victories on the cultural and legal fronts, Netscape had to match Microsoft and give up on charging users in the meantime. Software tended toward free, and the internet was made of software. Netscape pivoted to advertising, which became the standard move for companies with nothing to sell but user attention. Still, early investors were not too worried about how web start-ups were going to eventually make profits; it was a land rush, so they pushed in and kept their eyes fixed on the IPO horizon. Established banks were happy to play along, especially considering the inflated fees they could charge players in the frothy sector. Remember that people were doing a lot of cocaine.
chuckled
The real problem with the delivery dot-coms was that the people running them didn’t understand their historical context. In 2013, Peter Relan, the founding head of technology at Webvan, published a post on TechCrunch discussing why the company failed and how the next round of delivery start-ups could avoid the same fate. Webvan’s strategy, he wrote, was to offer “the quality and selection of Whole Foods, the pricing of Safeway, and the convenience of home delivery.”59 But according to Relan, the company shouldn’t have invested in so much infrastructure. Webvan built high-tech distribution systems from scratch: giant networks of new algorithms, miles of conveyor belts, fleets of custom trucks with PalmPilot-wielding delivery drivers. At its short peak, Webvan had a billion-dollar contract with Bechtel to build new distribution facilities around the country. This was the utopian vision of e-commerce, one in which the web’s efficiencies generated gains for everyone involved: investors, workers, and customers alike. In a 2000 report to the Securities and Exchange Commission, Webvan bragged that all its couriers “are Webvan employees.… The courier training lasts two weeks and includes 36 hours of classroom training, 12 hours of driving training and 28 hours of on the job training.… Webvan’s couriers receive a competitive compensation package, including cash and stock options…”60 Commentators pegged Webvan’s delivery-labor costs at $30 an hour, or over $50 in 2022 money.61 Of the company’s 4,476 reported employees on January 1, 2001, 3,705 worked out of the “real” operating facilities spread over nearly 1.5 million square feet of rented urban warehouse space across seven metropolitan regions.62 The company filed for Chapter 11 bankruptcy in the summer of 2001 after losing hundreds of millions of dollars the year before.63
ahhh this is good
As Google grew, it combined the monopolistic business strategy of Microsoft with the disrupting scraper speed of Napster. It’s a potent combination, and it left Google strong enough to defend its book scanning from the Authors Guild all the way to the top courts. Not even Bill Gates himself could have conceived of a business plan in which his company extracted value from every word accessed or typed on a Windows machine. Google belonged to a different era. In the closing decades of the twentieth century, as output growth slowed and capital hunted for low-commitment bets, global advertising increased dramatically. In the second half of the 1980s, TV ad spending doubled, from $25 to $50 billion, then doubled again in the ’90s, then doubled again in the first decade of the new millennium—and for the first couple of decades, newspapers and magazines matched that growth.26 Advertising was a good way to compete without getting into the risky business of price competition or product innovation. The fact that ads didn’t actually add anything to the economy was good, since the world was increasingly oversupplied with cheap stuff anyway.
In the following years, before the Facebook IPO, Milner vehicles DST and Mail.ru increased their positions in Facebook, pleasing their investment partners by offering to take their shares off their hands if they lost their nerve, and pleasing Facebook by financing an 8–10 percent stake in the company without asking for anything other than a seat on the ride. With the IPO, they netted billions of dollars in profit. The London Sunday Times named Alisher Usmanov not only Russia’s richest man but also, with his London mansion, Britain’s richest man, displacing Indian steel magnate Lakshmi Mittal.27 Usmanov channeled his generic iron-ore monopoly profits into Anglophone brand plays, including the Arsenal Football Club (30 percent) and Apple, pushing $100 million into the iPhone maker and putting a stop to a dangerous and somewhat unexplained slide in investor confidence.28 Milner continued pumping up tech valuations, investing in Facebook-based game maker Zynga, discount coupon site Groupon, and music streamer Spotify. He put $380 million in Twitter, and in 2011 he teamed with famed Silicon Valley angel Ron Conway to offer $150,000 to each and every start-up in the Bay Area tech accelerator Y Combinator, laying down a bet on the whole regional ecosystem.
When it came out in 2017 that a significant amount of DST’s capital originated with the Russian state, the news yielded shrugs in the industry.30 No one could suck that kind of money out of the country without close ties to the government.vii And besides, sovereign wealth funds invest in Silicon Valley all the time. Saudi prince Al Waleed bin Talal made a crucial nine-figure investment in Apple in 1997.31 SoftBank, one of the biggest investment funds hunting in Silicon Valley, got most of its game-changing $100 billion Vision Fund from Gulf monarchies.32 Why wouldn’t Putin want to put money in Facebook? As far as the gangster state was concerned, there was no better place to allocate the nation’s cash. Based on the numbers, it’s hard to disagree, and in Silicon Valley, which Milner now calls home, he’s in good standing in the highest reaches of the capitalist elite. [...]
When one of the Sac Street dealers told the Mercury News that he was just another businessman in the Bay Area, his specific references might have been lost on the average reader. “You expect me to work at McDonald’s or Home Depot?” he asked reporter Sean Webby a couple of years after the shopping center opened. “I make more here in an hour than I would make there in a week.”41 McDonald’s and Home Depot weren’t just arbitrarily chosen mass-market businesses dependent on low-wage service work: They were also two of the big tenants at the Ravenswood 101 Retail Center, along with (no surprise) Starbucks and three big-box electronics retailers. The state authorities and their friends at the Department of Commerce did expect him to work at McDonald’s or Home Depot, or Togo’s or Taco Bell, or Good Guys or Best Buy or Office Depot. Precisely so. That’s where EPA was adding jobs in the twenty-first century, and there wasn’t anything subtle about it. In addition to Hoover’s federal department and the retailers, the center’s inaugural plaque acknowledges Bank of America and the David and Lucile Packard Foundation. At the very bottom: ORIGINAL SITE OF RAVENSWOOD HIGH SCHOOL.
In East Palo Alto, as in the rest of the world, capital called forth the labor it needed at a price it was willing to pay. There’s no reason we need to pretend that authorities at any level wanted everyone in LouAnne Johnson’s bused EPA class to succeed, for none of them to be left behind. Capitalists needed low-wage employees because that’s where the growth was. If all the kids in East Palo Alto became engineers and doctors and lawyers, who would fill the hundreds of jobs at the new IKEA by the freeway? In 2003, the hulking furniture sales warehouse filled out the Ravenswood 101 center, thrilling local shoppers in a way big box electronics resellers never could. It was the age of brands, even if the brands were attached to DIY sheets of plywood. Domestic IKEAs were few and far between at the time. The store’s serve-yourself model reduced the number of higher-wage delivery, warehouse, and sales jobs, leaving mostly deskilled service gigs with compensation near the legal minimum. Locals protested during the zoning process that they wanted a grocery store instead—as with a high school, East Palo Alto went without—but leaders were swayed by the retailer’s promise of at least $1 million a year in tax revenue.55 The store opened its doors to what the San Francisco Chronicle described as a “rampaging horde.”56 Say what you will about drug users; they don’t line up 5,000 deep to score. Fifteen minutes on foot from Sacramento Street, the new million-dollar spot was blue and yellow.
It’s a mistake, then, to think of Uber’s carcinized business strategy as driven by its scandal-prone leader, Travis Kalanick, and his bad personality. When author Brad Stone asked Kalanick why the company raised over $10 billion in the previous two years alone, the billionaire’s answer comes off as more resigned than pumped: “If you didn’t do it, it would be a strategic disadvantage, especially when you’re operating globally,” he told Stone. “It’s not my preference for how to build a company, but it’s required when that money is available.”14 That last part is worth repeating: It’s required when that money is available. If Uber didn’t take $3.5 billion from Mohammed bin Salman and the Saudi kingdom’s sovereign wealth fund, the royals would have put it on Lyft, and then maybe no one would want to invest in Uber, and then it would all be over. These companies didn’t choose to become crabs—that’s not how evolution works. The founders couldn’t stop themselves any more than the railroad barons could.